Architects Professional Indemnity Insurance
As an Architect you need to have architects indemnity insurance to comply with the ARB and RIBA. We provide insurance for Architects quickly, easily and very competitively from the UK’s leading Insurers. Compare quotes online or call us for a bespoke quote and advice from our expert advisors.
Fully compliant with ARB professional indemnity requirements
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Usual cover for Architect PI Insurance
Cover normally includes:
- Liability for dishonesty
- Liability for lost documents
- Libel and slander
- Breach of warranty of authority
- Loss of documents
- Collateral warranties
- Occasionally, some insurers will offer cover for the litigation costs of recovering unpaid fee accounts
Typically, policies will exclude:
- Death or bodily injury
- Loss or damage to physical property
- Punitive or exemplary damages
- North American offices
- Liability to other insureds
- Nuclear risks
- Claims and circumstances known at inception of the cover
- Acting as contractor
- Onerous collateral warranties
How do insurers deal with Architecture as a profession?
We’ve included some commentary below regarding architecture as a profession, a little background followed by information regarding insurers views on the architectural profession as a whole, and some useful claims examples that highlight some of the pitfalls that you may encounter. It may assist you to read and see where your business fits into the grand scheme of things, possibly assisting you to highlight some aspects that may or may not affect your business.
Architecture is one of the older established professions and, as such, Architects are regarded as a “traditional” profession. All Chartered Architects are associates or fellows of the Royal Institute of British Architects (RIBA) although not all Architects are members. Like all those involved in the building industry, Architects have been affected by legislation. The Housing Grants, Construction and Regeneration Act 1996 became law in May 1998. It was designed to tackle problems such as excessive delays in claims and protracted and costly disputes within the construction industry. The legislation did so by incorporating adjudication procedures into all but a few building contracts so that disputes that give rise to claims can be settled in a matter of weeks. Contracts involving private residences at one end and very large engineering projects at the other, are excluded from the new process.
What do insurers look for?
As with other traditional professions, insurers will look for qualifications or experience. If a consultant is unqualified the Insurer will want to see a CV. Insurers will analyse a breakdown of the fee income, attention commonly being paid to:
Architectural work – new build. Higher hazard. Particularly work involving structural design for industrial or commercial clients. Attention is paid to public sector clients where the work may involve repetitive design e.g. low cost housing or Housing Association work.
Architectural work – non structural. Lower hazard. where work is in the private residential sector but increasing hazard where work is in the commercial sector. Claims tend to be less expensive as the remedial work does not involve the building’s “skeleton”.
Town planning. Lower risk as nothing is being designed for construction but sizeable losses can occur.
Feasibility studies. Lowest risk of all because at the stage of feasibility no actual building work has taken place. If the project fails to materialise then the risk to insurers is very low indeed.
Architectural consultancy. A “catch-all” for other miscellaneous work done by Architects – if it is a large proportion of the annual fees then an explanation is most likely needed.
Interior design. Low hazard but increasing where work involves the retail sector, where contract sizes can be high and often with a significant amount of supervisory responsibility. Interior design by its nature tends to be transitory – particularly in the retail sector where premises “re-invent” themselves regularly.
Quantity surveying. Project managing and project co-ordinating. Lower hazard.
Project managing. Architects rarely carry out the QS function but they may find themselves project managing with a responsibility to appoint all other consultants as their sub-contractors. This is a much higher hazard as any claim, regardless of fault, would come through the Architect whose insurers would then have to subrogate against the party at fault. It is essential that the Architect ensures that all others in the design team and the contractor maintain adequate Professional Indemnity.
Project Co-ordination. The Architect carries out a project management role but does not appoint the others (they are appointed directly by the client) this is better from a risk perspective.
Surveys. Higher hazard. Architects would rarely carry out surveys for lending purposes but are far more likely to do a condition survey as part of a job. It is unusual for a condition survey to be carried out in isolation unless the job is then aborted which would be of little risk to insurers. Other areas of interest for underwriting purposes include:
- Contract sizes. There is a direct relationship between the size and complexity of the job and the exposure.
- Technology. Is the firm using “cutting edge” technology or standard, tried and tested processes?
- Overseas exposure. Does the practice carry out work for overseas clients? Careful consideration would be paid to such work carried out for US or Canadian firms.
- Retroactive exposure. Does the practice have an exposure to claims arising from past work, whether in the current firm or a former practice?
- Negligent design on industrial new build - design failure in respect of industrial distribution warehouse. Building incapable of housing refrigeration plant due to incorrect design of internal load bearing roof. Settled £75,000
- Negligent design on commercial new build - incorrect design of fuel tanks in respect of new petrol station development led to failure of standard industry health and safety check. Alterations cost £18,500
- Negligent design on residential new build - Architect signed practical completion certificate on a residential new build job. Dozens of snagging problems then arose which the contractors failed to resolve. Settled £5,000
- Failure to seek planning permission - Architect instructed to plan and design office development. Although planning permission requested and received from Local Authority, there was a failure to seek permission for the correct area. Settled £9,000
- Inadequate supervision - Architects instructed to produce specification and supervise the renovation works to a church roof. After contractor went “bust”, roof failed after heavy rain and it subsequently transpired that work carried out by contractor was inadequate. Claimant alleged proper supervision by Architect would have avoided problem. Settled £100,000
- Negligent site layout - Architects instructed to design a residential development comprising of ten properties. Dimensions for the site were provided by Surveyors but were incorrectly translated by Architects and the development encroached on to land owned by Local Authority. Additional costs incurred in purchasing additional land. Settled £10,000
- Negligent survey report - Architect instructed by residential property developer to carry out a pre-purchase/exchange survey on a residential property. On the basis of the Architect’s report the property was purchased in part-exchange for one of their properties. A subsequent survey by prospective purchasers revealed serious cracks to structural wall. It was alleged Architect should have warned of the problem in order to trigger further expert investigations. Settled £20,000
- Failure to adequately specify - Architects instructed to design a number of hotels. After completion of project one of the hotels suffered a fire which resulted in major damage. During repairs it was noticed that the fire resistant material used in the property was inadequate. It was later alleged that the Architect failed to specify material correctly. The error meant material in all hotels had to be replaced. Settlement £500,000
RIBA and ARB compliant cover
The Royal Institute of British Architects (RIBA)
- the RIBA is a professional body that represents the interests of the profession. They provide professional training and qualifications and access to information. The RIBA is not a governing body but they do require their members to maintain professional indemnity cover.
Architects Registration Board (ARB)*
- it is the Architects Registration Board (ARB) that is the governing body. They “police” the profession and they set the guidelines and the minimum standards for professional indemnity cover. The main features of their rules are:
- Policy wording - cover must be written on a civil liability basis; “neglect, error or omission” is not wide enough
- Limit of indemnity - limits must be on an “any one claim/each and every claim” basis, unlimited in any one period
- Maximum/minimum excess - these are not defined by the ARB other than to say they must be affordable
- Legal defence costs - must apply in addition to the limit of indemnity
- Run-off cover - if the practice ceases, partners must ensure that they purchase run-off cover for at least six years. The limit of indemnity must be maintained at the highest level in the preceding three years to the cessation of the practice
- Minimum prescribed levels of cover
- Fee income less than £100,000 – £250,000 limit of indemnity
- Fee income between £100,000 and £200,000 – £500,000 limit of indemnity
- Fee income exceeding £200,000 – £1,000,000 limit of indemnity
*These requirements are correct as of July 2004.
Royal Institute of British Architects (RIBA)
RIBA’s mission is to advance architecture by demonstrating benefit to society and promoting excellence in the profession.
The Architects Registration Board (ARB)
The ARB was established in 1997, and is the independent regulator for the architects’ profession in the UK. It has a dual mandate to protect the interest of consumers and to safeguard the reputation of architects.
On-line information for Architects.